Dassault Systemes Reports Strong Q2 Financials

DS completed the acquisition of MatrixOne ahead of schedule and introduced its PLM Collaborative Environment Portfolio

On May 11, 2006, DS announced the completion of the acquisition of MatrixOne Inc. and the introduction of its new PLM Collaborative Environment portfolio under the ENOVIA brand name.

-- ENOVIA VPLM - 3D Collaborative Virtual Product Lifecycle Management of highly complex product, resource and manufacturing processes in medium and large extended enterprises.

-- ENOVIA MatrixOne - Collaborative Product Development business processes for enterprises across a wide range of industries, and including Synchronicity for semiconductor design data management.

-- ENOVIA SmarTeam - Collaborative Product Data Management for small and mid-sized enterprises, engineering departments of larger organizations, and across supply chains.

Cash dividend approved by shareholders at Annual Shareholders' Meeting

At the Annual Shareholders' Meeting held on June 14, 2006, DS' shareholders approved the payment of an annual cash dividend equivalent to EUR 0.42 per share, representing EUR 48 million in the aggregate, for the fiscal year ended December 31, 2005.

Strategy, Technology, Customers and Partnerships

In June, DS unveiled its V5 SOA strategy, demonstrating the Company's commitment to extend the benefits of PLM solutions to new markets as well as new types of users and communities. V5 SOA is the cornerstone for DS and its partners to deliver fully collaborative PLM services on demand. V5 SOA is the technical foundation for DS' PLM brands and partners' solutions moving forward, designed to bridge the gap between PLM solutions and existing enterprise middleware.

DS introduced ENOVIA 3D Live beta version, the first 3D Collaborative Intelligence solution, exploiting DS V5 SOA architecture for online applications. Via an intuitive interface, ENOVIA 3D Live enables any individual to instantly search and navigate any PLM information, regardless of location, source or format.

SolidWorks unveiled SolidWorks 2007, powered by revolutionary "SWIFT(TM)" technology. In addition to more than 200 new features, this latest version of the leading 3D CAD software introduces SolidWorks Intelligent Feature Technology ("SWIFT(TM)"), which for the first time puts expert-level techniques for 3D CAD's most challenging design operations in the hands of every user.

ENOVIA MatrixOne announced the latest updates to the MatrixOne Medical Device Accelerator. The MatrixOne MDA manages Quality System Regulation/ISO-regulated design processes, projects, documents and data, and is the only medical device-tailored solution built on an enterprise-class PLM platform that has been proven effective at the industry's top three device manufacturers.

First Half 2006 Financial Summary

-- GAAP total revenue of EUR 532.1 million, up 28% as reported for first half

-- Non-GAAP total revenue of EUR 542.0 million, up 30% and 29% in constant currencies

-- Non-GAAP revenue excluding ABAQUS and MatrixOne up 14% in constant currencies

-- GAAP software revenue of EUR 451.1 million, up 30%

-- Non-GAAP software revenue of EUR 461.0 million, up 32% and 31% in constant currencies

-- Non-GAAP software revenue excluding ABAQUS and MatrixOne up 17% and up 16% in constant currencies

-- GAAP EPS of EUR 0.51; Non-GAAP EPS up 20% to EUR 0.71 with operating margin of 24.1%

Business Outlook

Thibault de Tersant, Executive Vice President and CFO, stated, "Business activity was strong in the second quarter and we continue to see stronger activity for the second half despite some potential signs of softening of the economic environment globally. Therefore, on a constant currency basis, we are raising our 2006 revenue growth objective to about 27-28%, compared to our previous assumption of 25-26%, reflecting higher expected activity of about EUR 15 million for the full year, including the second quarter overachievement. At the same time, we are reconfirming our operating margin objective and increasing our EPS objective slightly.

"Due to the volatile currency environment, we believe it is prudent to update our exchange rate assumptions for the US dollar and Japanese yen. The higher activity level expected for the full year and more conservative currency assumptions largely offset each other on a reported revenue basis."

-- Third quarter Non-GAAP total revenue of about EUR 280-285 million, Non-GAAP EPS of about EUR 0.33-0.34 and Non-GAAP operating margin of about 22.0%;

-- 2006 Non-GAAP total revenue objective of about EUR 1.175-1.185 billion, representing 27-28% growth in constant currencies;

-- 2006 Non-GAAP operating margin of about 27.0%;

-- 2006 Non-GAAP EPS of about EUR 1.77-1.79; +11-13% growth;

-- Objectives based upon US$1.30 (previously US$1.25) per EUR 1.00 and JPY 145 (previously JPY 140) per EUR 1.00 exchange rate assumptions for the third and fourth quarters of 2006.


    1. All comparative figures are given on a year-over-year basis
    unless specified otherwise. All EPS figures refer to fully diluted
    earnings per share, unless otherwise noted.

    2. All financial information is unaudited and reported in
    accordance with U.S. generally accepted accounting principles
    (U.S. GAAP). Additional financial information is also presented
    that is not in conformity with U.S. GAAP, in particular the
    presentation of revenue before deferred revenue write-downs, and
    operating income, operating margin and earnings per share before
    deferred revenue write-downs and excluding acquisition costs
    (acquisition costs are primarily comprised of technology and other
    acquired intangible assets amortization in addition to other
    acquisition-related costs) and share-based compensation expenses.
    The Company believes this information, which is not in conformity
    with U.S. GAAP, is helpful supplemental information in order to
    better understand its past and future performance. In addition,
    the Company's management uses this information in its planning.
    This information provided by the Company may not be comparable to
    similarly titled measures employed by other companies. The Company
    has provided in the tables to this press release and on its
http://www.3ds.com/corporate/investors/ reconciliations
    between U.S. GAAP and Non-GAAP figures.

    3. The Company uses constant currency revenue growth to evaluate
    its financial performance in comparison to prior periods and as a
    measure of expected growth in planning and setting objectives for
    future periods. The Company believes this measure is an important
    indicator of the Company's progress and outlook because it
    provides a better gauge of the level of change in the business
    activity as it eliminates any changes arising from currency
    fluctuations. The Company believes the presentation of this
    measure is relevant and useful for investors because it allows
    investors to view revenue growth in a manner similar to the method
    used by the Company's management, helps improve investors' ability
    to understand the Company's revenue growth, and makes it easier to
    compare the Company's results with other companies, including
    competitors, whose reporting currency may be different from
    Dassault Systemes. Constant currency revenue growth, as calculated
    by the Company, may not be comparable to similarly titled measures
    employed by other companies.

Conference call information

Dassault Systemes will host a teleconference call today, Thursday, July 27, 2006 at 3:00 PM CET/2:00 PM London/9:00 AM New York. The conference call will be available via the Internet by accessing http://www.3ds.com/corporate/investors/ . Please go to the website at least fifteen minutes prior to the call to register, download and install any necessary audio software. The webcast teleconference will be archived for 30 days. Financial information to be discussed in the call will be available on the Company's website prior to commencement of the teleconference at http://www.3ds.com/corporate/investors/ . Additional investor information can be accessed at http://www.3ds.com/corporate/investors/ or by calling Dassault Systemes' Investor Relations at

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